U.S. lawmakers have introduced a bill that would prohibit federal government officials from conducting business with blockchain firms based in China. The move reflects growing concerns in Washington about Chinese involvement in the cryptocurrency industry. The legislation, known as the Creating Legal Accountability for Rogue Innovators and Technology (CLARITY) Act, also specifically prohibits government officials from engaging with iFinex, the parent company of Tether, the issuer of the world’s largest stablecoin, USDT.
The bill, co-led by U.S. Representatives Zach Nunn (R-Iowa) and Abigail Spanberger (D-Va.), aims to prevent government officials from transacting with Chinese crypto companies and from using China-based blockchains. These blockchains form the foundation of crypto trading platforms. It is worth noting that neither Nunn nor Spanberger hold prominent positions on committees or are part of the U.S. House of Representatives leadership.
Other lawmakers, who are more senior and influential, are already working on several crypto-related bills, some of which address security concerns. These bills have received approval from full House committees and are further along in the legislative process. Therefore, it is unlikely that the CLARITY Act will be prioritized ahead of these existing measures.
The sponsors of the bill stated that its purpose is to ensure that “foreign adversaries do not have a backdoor to access critical national security intelligence and Americans’ private information.” They emphasized the potential risks posed by China’s heavy investment in blockchain infrastructure, stating that within the next decade, every American will have sensitive data stored using blockchain technology. They argue that this poses a significant national security and data privacy issue.
Representative Nunn, a freshman member who joined the House this year, expressed his concerns about China’s influence in the blockchain sector. He stated that China’s significant investment in blockchain infrastructure raises national security and data privacy concerns for the United States.
In addition to banning officials from transacting with iFinex, the bill also prohibits transactions with The Spartan Network, The Conflux Network, and Red Date Technology Co. The latter is responsible for China’s national blockchain project and its central bank digital currency, known as the digital yuan or CBDC.
The proposed legislation also instructs the U.S. Secretary of the Treasury, Secretary of State, and the Director of National Intelligence to develop a plan to address the risks associated with China’s and other foreign adversaries’ development of blockchain technologies.
This move follows a security-driven ban on the use of TikTok by government employees earlier this year. TikTok, a popular social media app with Chinese roots, faced scrutiny after a former employee alleged that the Chinese Communist Party used a secret “backdoor” to monitor the activities and messages of Hong Kong-based activists in 2018.
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